COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2026

Commitments and Contingencies Disclosure [Abstract]

Aircraft commitments

Alaska and Hawaiian have contractual commitments for aircraft with Boeing. The amounts disclosed below reflect commitments for firm aircraft. Option deliveries are excluded until exercise.

Boeing continues to experience aircraft delivery delays attributable to supplier availability and production challenges. These factors represent known uncertainties that may continue to affect the timing of aircraft deliveries. The table below reflects Boeing’s most recent communications and management’s current estimates.

Details for contractual aircraft delivery commitments as of September 30, 2026:


	Firm Orders	Options and Other Rights
Aircraft Type	2026-2035	2028-2035
B737	168	71
B787	12	—

Total	180	71

Capacity purchase agreement (CPA) commitments

Alaska has obligations associated with its CPA with SkyWest. The amounts disclosed below consider certain assumptions regarding the level of flying performed by the carrier on behalf of Alaska and exclude lease costs associated with the CPA.

A summary of aircraft and capacity purchase agreement commitments as of September 30, 2026:


(in millions)	Aircraft		Capacity Purchase Agreements
Remainder of 2026	$	340	$	53
2027	1,738		215
2028	1,618		221
2029	1,189		227
2030	1,050		153
Thereafter	4,264		160
Total	$	10,199	$	1,029

Contingencies

The Company is a party to routine litigation matters incidental to its business and with respect to which no material liability is expected. Liabilities for litigation related contingencies are recorded when a loss is determined to be probable and estimable.

As part of the 2016 acquisition of Virgin America, Alaska assumed responsibility for the Virgin trademark license agreement with the Virgin Group. In 2019, pursuant to that agreement's venue provision, the Virgin Group sued Alaska in England, alleging that the agreement requires Alaska to pay $8 million per year as a minimum annual royalty through 2039, adjusted annually for inflation and irrespective of Alaska's actual use (or non-use) of the mark. Alaska stopped making royalty payments in 2019 after ending all use of the Virgin brand. On February 16, 2023, the commercial court issued a ruling adopting Virgin Group’s interpretation of the license agreement. Alaska appealed the decision. On June 11, 2024, the appellate court issued a final decision affirming the lower court ruling in favor of the Virgin Group. Alaska also commenced a separate claim for breach of the agreement against the Virgin Group that may affect Alaska’s total liability in the matter. In 2025, Alaska was ordered to pay Virgin Group $32 million, representing past due royalties through September 2022, when Alaska commenced its separate claim against Virgin Group. Alaska holds an accrual for $47 million in Other accrued liabilities in the condensed consolidated balance sheets, representing the expenses associated with the trademark license agreement incurred through September 30, 2026, and management's current estimate of the amount due to the Virgin Group.

Other legal proceedings

In October 2023, an aviation accident occurred during a training flight operated by Hillsboro Aero Academy (“Hillsboro”), an independently owned and operated and FAA-regulated Part 141-certified flight school in Oregon. This accident resulted in the death of a Hillsboro student and flight instructor and significant injuries to another Hillsboro student onboard. Both students were members of Ascend Pilot Academy, a program designed to provide Hillsboro students, upon graduation from Hillsboro and completion of other flight training requirements, an opportunity to interview for pilot positions with Horizon. Alaska Airlines and Horizon did not provide the students’ flight training or employ the instructor. Multiple lawsuits were filed in numerous courts in Washington and Oregon by parties impacted by the accident, naming Hillsboro, Alaska, and Horizon as defendants. The lawsuits allege, among other things, that Alaska and Horizon, along with Hillsboro, bear responsibility for the accident and for plaintiffs’ resulting economic and non-economic damages. Subsequent to quarter end, the Company reached a settlement in principle to resolve all claims by the estate of the deceased student. The Company recorded its contribution to the settlement, which is not material, to the unaudited condensed consolidated financial statements, within Special items – operating in the condensed consolidated statements of operations for the three months ended September 30, 2026. The lawsuit filed by the injured student remains ongoing. The Company disputes the allegations in that lawsuit and intends to vigorously defend against them.

The outcomes of legal proceedings and other contingencies are unpredictable and subject to significant uncertainty. The Company regularly evaluates developments in its legal proceedings to determine whether a loss is probable and reasonably estimable. Adverse outcomes in these proceedings could be material to the Company’s financial results in a particular period. For matters that are disclosed without an estimated loss or range of losses, a loss is either reasonably possible but not probable, or the amount of loss cannot be reasonably estimated or is immaterial.

Credit card agreements

Alaska and Hawaiian have agreements with certain credit card companies to process the sale of tickets and other services. Under these agreements, there are material adverse change clauses that, if triggered, could result in the credit card companies holding back a reserve of up to 100% of the credit card receivable balance associated with that processor, which would result in a restriction of cash. For example, certain agreements require Alaska to maintain a reserve if Air Group's credit rating is downgraded to or below a rating specified by the agreement or if its cash and marketable securities balance fell below $500 million. The Company is not currently required to maintain any reserve under these agreements. If Air Group were unable to obtain a waiver of, or otherwise mitigate the increase in the restriction of cash, it could have a material impact on the Company's operations, business or financial condition.